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Why Use a Wholesale Mortgage Banker?

Published on February 20th, 2008 by | Filed Under: Buying a Home in NJ, Millburn & Short Hills Living, NJ Mortgage Update

Consider using a Wholesale Mortgage BankerĀ for your mortgage this Spring. Why?Keys To Ownership

Wholesale Mortgage Bankers have access to two distinct sources of mortgage money:
  • Secondary Market:

This source of capital comes from investors that invest in mortgage backed securities. Loans are originated then sold to Wall Street banks, bundled into mortgage backed securities and sold.

If a particular loan fits within FNMA’s guidelines they are then sold to FNMA. Since FNMA loans are a large percentage of the overall mortgage market, their 30 yr fixed rate is often the standard when rates are quoted. These rates are driven by the appetite that investors have for buying mortgage backed securities. Their rates are totally market driven.

In the last two months, the market has driven those rates from 6.375%, down to 5.25% and back up to 6.5%. This is a reflection of investor’s outlook for the future value of mortgage backed securities.

  • Portfolio Lenders:

This source of capital comes from banks (mostly local savings and loans) that lend depositors money, and keep the loans in their portfolio. They do not sell them and therefore they are not tied to the rise and fall of FNMA rates.

They make their own decisions about the future value of the mortgages they originate and price their loans accordingly. More often than not these two entities look at the same set of variables to determine their rates and therefore tend to move in lock step.

What is so interesting about the current climate is that FNMA rate volatility has widened the spread between the rates of the two mortgage sources. The S&L’s simply do not react as quickly as the market driven FNMA lenders.

Wholesale Mortgage Bankers have an advantage because they have access to both types of loan sources. That is why their 30 yr conforming rate could be as low as 5.625% while the FNMA 30 yr conforming is 6.50%.

Wholesale Mortgage Banker can have access to many sources of mortgage money such as the big lenders like Wells Fargo, Chase, Wachovia, US Bank Corp. etc, and the local S&L’s as well.

In the current real estate market, wholesale mortgage bankers should be your best friends.

To learn more about the type of home you qualify for, please contact Perri K. Feldman at Perri@MidtownDirectHomes.com.

  1. Keith Junor

    Very well researched post. I am a mortgage broker and Realtor in Fort Lauderdale , FL for the last 17 years.
    The mortgage meltdown is killing my mortgage business but I am getting a few buyers looking to purchase in Florida from Canada and the Northern United states.

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Perri K. Feldman

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Perri K. Feldman

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